NC State Economist Dr. Mike Walden – “Where’s the Inflation?”

Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program asks, where’s the inflation?   Mike, a higher inflation rate has been widely anticipated for years, yet most statistics show it has now arrived.  What went wrong with the forecasts, but maybe right for the rest of us?

 

Mike:  Summary Answer

  1. Ever since the Federal Reserve increased the money supply by a factor of 8 to fight the recession, there have been warnings that higher inflation is coming
  2. But most measures show inflation very tame at between 1.5% and 2% annually
  3. Two reasons
  4.  Much of the created money has stayed in the vaults of the Fed and not put in circulation
  5. Used as backstops for the banks
  6. Second, money is not turning over as fast as it used to – called velocity
  7. As long as these conditions continue, inflation should be at bay
  8. I’m MW

 

Mary:  And I’m Mary Walden for the North Carolina Cooperative Extension Service


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